MANKATO (TEC News) - The Minnesota Senate has shifted its focus onto the state's current tax applied to cigarette purchases. The amount that the tax would increase has not yet been decided; however, the Senate does have several reasons for wanting to see an increase: the tax has not been raised since 2005 when the Pawlenty Administration raised the tax to $1.23 per pack. The increased price would also help to discourage smoking, which would ultimately lower healthcare costs by eliminating long-term chronic diseases.
Senate data does show that increasing the price of a product discourages the purchasing of the product, said Sen. Kathy Sheran.Under the Senate's plan, the excess money would also be placed in the state's general fund. That money would then be redistributed to public programs across the state. In addition to the Senate's efforts, the Governor's Office submitted an alternative plan that would use the cigarette tax dollars as a backup plan to help fund the new Viking's stadium, said Sheran. The governor's plan was presented to the Senate's tax conference committee Thursday morning. The new plan, an increase of $2.52 per pack, would take the cigarette tax dollars meant for the general fund and "fill in the gap[s]" of the money needed by the state in the next biennium to fund the Viking's stadium. This money would be used as a way to supplement what the state's electronic pull tabs and are not generating. If passed, the new plan would be a one-time cigarette tax collection paired with the closing of corporate tax loopholes, said Sheran: Sheran 1 "stadium shortfall" :31
Closing the loopholes would generate $26 million in the first year, and $20 million per year of future permanent revenue. And in the future, the governor's plan has the authority to use the loophole money to supplement any shortfalls from the electronic gambling money. And any future cigarette tax dollars would either help fund the Viking's stadium, or be placed into the general fund, said Sheran.